Swedish pension backs emerging market loan fund

Alecta has allocated $100m to an impact investment vehicle to be managed by NN Investment Partners and FMO.

Alecta, the SEK800 billion ($100 billion) Swedish occupational pension fund, has allocated $100 million to the NN-FMO Emerging Markets Loan fund.

The fund is managed by a partnership between NN Investment Partners, the Euronext Amsterdam-listed asset manager, and FMO, the Dutch development bank.

Alecta said the allocation “presents an attractive opportunity to finance sustainable development projects while generating stable returns to our beneficiaries”.

On its website, FMO says the fund offers a good return through a relatively high illiquidity premium, rate sensitivity due to the variable interest rates on the LIBOR +bps loans, and an attractive risk-return profile through “the full integration of environmental, social and corporate governance aspects in all parts of the investment and portfolio management process”.

The performance target and final closing amount targeted for the fund are not currently known. The fundraising is currently at a first-round stage, with NN-FMO having entered discussions with other potential investors. The fund is expected to announce a first closing in the fourth quarter of this year.

“We are convinced that long-term perspective and ESG integration, together with a focus on cost-efficient asset management, creates conditions for strong value creation over time,” said Magnus Billing, chief executive officer of Alecta, which has a green bonds portfolio currently valued at SEK14 billion.

FMO said it brings emerging markets investment experience to the fund, having invested in more than 85 emerging markets, while NN IP brings fund management and client servicing capabilities.